Bill French Case Study

Bill French Case Study

These are the following scenarios we have considered:

1. In this scenario, we change the production of 'C' only, keeping 'A' and 'B' at the earlier levels.The goal seek has been applied to achieve a profit of Rs. 12,00,000.

2. As we can see from the Break Even Analysis, the BEPx for the Aggregate is less than the sumof the BEPxs for the individual products because we can see that 'A' is the unprofitable product.Therefore, we have to produce more to achieve the BEP.

3. Here, we go by the forecast of the administration to increase the overall production to 90%,keeping the proportion of 'A', 'B' and 'C' constant, we achieve a profit of Rs. 18,00,000

4. In this case, we have reduced the production of 'A' as per the case.Also, the initial variablecosts have been considered assuming that the company has not budged to the union's demand of hike in salary. Thus, we find out the required level of production of 'C' to make profit of Rs.12,00,0005. This is a slight modification of the previous scenario in which we are producing just enough of 'A' to recover its fixed cost, that is to say, producing 'A' at its BEP. This increases our overallprofit.

6. This scenario is established according to the requirement of the case to have the net profitafter taxes and dividends as Rs. 1,50,000. With dividends worth Rs. 4,50,000 and taxes of 50%to EBT, we need to have the EBT or the profit at Rs. 12,00,000. The increased fixed cost of Rs.7,20,000 is also divided amongst the products in the proportion of their sales.